Risk management vital to funded healthcare`s future

The healthcare insurance industry is under substantial pressure at present. International trends show healthcare expenditure constantly rising, driven by several factors, including longevity and an ageing population; increasing consumer demands; higher utilisation of medical aid funds; and more expensive pharmaceuticals. The increased burden this places on medical insurers together with an accompanying increase in operating costs is endangering the health of the industry.

A simplistic view of the functioning of medical schemes is that they receive contributions, manage these funds and pay for services rendered. Complexity is added to this model with schemes trying to reap systems efficiency, compete for membership, keep administration costs down, deal with legislative issues and manage disbursements amid a plethora of other activities.

Probably the most complex task in the entire medical schemes industry is that of administration, particularly that of processing members` claims for professional services. It is in this arena where information technology plays its most visible role in containing the costs within the sector. This is vital for the future of the industry as schemes come under increasing pressure from members seeking to contain premium increases, and from regulators placing limitations on administration cost ratios. So, how can the medical insurance industry benefit from IT?

Since the early 1980s, doctors` practices have become increasingly computerised, with debtor systems being the initial requirement. This has evolved into more sophisticated practice management applications, now managing other areas of the practice including appointment scheduling, stock control and electronic medical records. With the possibility of these records being maintained in an electronic or digital format, even the smallest medical practice can make better business and clinical decisions, based on more complete information. However, it remains a challenge for medical professionals to let go of pen and paper and trust the machine.

It is imperative that the healthcare insurance industry in SA adopts and implements technology-based solutions at a more rapid pace.

Hennie du Plessis, CEO, Digital Healthcare Solutions

In the early 1990s, well before the Internet became a business tool, another group of innovators conceived the notion of conveying medical claims electronically. Borrowing IT protocols from retail and commerce, Electronic Data Interchange (EDI) for the healthcare industry was born. Through this interchange, medical practices started to submit accounts (claims) directly to the medical schemes electronically.

Currently, over 60% of all claims for medical services rendered in SA (almost R20 billion per annum) are submitted electronically - a higher proportion than anywhere else in the world. An estimated 13 000 medical businesses use EDI. Over 95% of claims for prescribed medicines are processed online; that is, the pharmacist knows before dispensing a drug that the patient is eligible and the account will be settled. Most pharmacies and many doctors use an electronic stock ordering facility. Some scheme administrators report that they receive over 80% of their claims electronically.

The changes in work behaviour and back-office systems that went on to get us to this point are staggering. And the advantages are impressive - processing an e-claim costs only 10% of its paper cousin, not counting queries. Doctors using an e-claims service typically get paid by EFT within two weeks of submission, some even within 24 hours.

These developments are the key to the future survival of the medical schemes industry and to the business continuance of medical practices. IT brings substantial cost savings through improved business efficiencies and a vast reduction in the amount of paper used. As a prime example of this, electronic claims submission, or switching as it is more commonly known, cuts the cost of printing and mailing claims, reduces call centre activity, improves compliance with the requirements of medical schemes and enhances the ability of doctors and medical schemes to manage risk. Switching plays the role of a telephone exchange and more - not only is a medical practice enabled to `speak` to a multitude of schemes by `phoning` only one number, but claims thus conveyed are scrubbed and verified by the switch for completeness before they are delivered. As a result, medical schemes receive cleaner claims, payment turnaround is improved and the quality of information exchange between parties is much improved.

Switching has advanced and today the majority of medical practices use some form of electronic connectivity to submit their claims to medical aid schemes and their administrators, many online and in real-time. Online switching systems enable a practice to rapidly ascertain whether the patient is eligible for services, and/or whether the claim will be honoured, thus reducing financial risk substantially. This also protects the scheme, enabling it to determine and mitigate its exposure in respect of medicines prescribed and the consequential effects of treatment dispensed.

The online information world holds advantages for the healthcare industry beyond the processing of claims. The exchange of patients` clinical information between practitioners, such as laboratory results and historical treatment details and outcomes, access to international medical knowledge bases, and the accumulation of national health and biomedical data to facilitate healthcare planning, policy-making and risk management, could revolutionise the way in which medicine is practised, care is managed and access for all is ensured.

It is imperative that the healthcare insurance industry in SA adopts and implements technology-based solutions at a more rapid pace. It is no longer a question of affordability of technology - it is already a question of whether we can afford to delay this any longer.